Add waterfall distribution steps

If the LLC waterfall type for your company is a distribution step based waterfall, you can add and customize the distribution rules, called steps, in your waterfall.

Important

  • A Residual distribution step will already be created when you first navigate to the Customize page. This step defines how remaining funds are distributed after all thresholds are met. Usually, the residual amount is distributed proportionally among all share classes based on their number of units.

  • You can't delete the Residual step as it will always be the last step in your waterfall definition.

  1. Go to your Diligent Equity cap table and select Waterfall in your left side navigation panel.

    The Waterfall page opens.

  2. Select Customize > Add.

    The Add distribution step wizard opens.

  3. Select your chosen Threshold type from the dropdown. For more information go to Threshold types explained.

    The threshold type you select defines any further information required to calculate the threshold.

  4. Select one or more classes and select Next.

  5. Select +Add distribution.

  6. Define the percentage, classes, and basis for pro rata for the distribution and select Next.

    7. Note

    • You can add as many distributions to a step as you need but the total distribution percentage of the step must equal, and not exceed, 100%.

    • If you make a mistake, delete the row with the error and start again. Due to constant monitoring of totals, editing individual rows can be complex, as Diligent Equity can't always predict your intent when making changes.

  7. Select the Distribution type.

    Wide is selected by default and Narrow is only active when applicable.

  8. Select Finish.

    Your new step is created.